If you’re a contractor or business owner in the construction industry, you may have been surprised by unexpected charges on your workers’ compensation audit. One of the most common reasons for this is the misclassification or lack of documentation regarding your subcontractors.
It’s Affecting Everyone—No Matter Your Business Size
It doesn’t matter whether you’re running a small crew or managing large-scale projects—these issues are affecting everyone. Workers’ comp carriers are auditing accounts more aggressively, and if you’re not prepared, you could be on the hook for coverage that shouldn’t be your responsibility in the first place.
Two Critical Steps to Protect Your Business
There are two crucial things you (or someone in your office) need to verify for every subcontractor you hire:
- Confirm that they are licensed in the state where the work is being performed.
- Ensure they carry their own workers’ compensation policy.
These two factors are what release your insurance company from liability if a subcontractor or their employees are injured on the job. Without proper documentation, your insurance carrier will assume they’re your employees and charge you accordingly.
Get the Right Documentation
Always request and retain a certificate of insurance (COI) from all subcontractors. Review it to confirm that workers’ comp coverage is listed and active. In addition, verify that their contractor’s license is valid and current in your state.
Doing this consistently can drastically reduce or even eliminate surprise audit bills—and prevent you from overpaying for coverage that isn’t yours to carry.
Avoid the Headaches of Workers’ Comp Audits
By taking these simple but essential steps, you’ll save time, money, and frustration. Don’t let administrative oversights cost you thousands in unnecessary premium charges.
